English translation of the original Korean report. Images and source documents may contain Korean text.

Company to Cancel 580,000 Treasury Shares on the 19th…Largest Shareholder’s 11.37 Million Shares Pledged to Korea Investment & Securities, Which Also Manages the Buyback Trust

Incar Financial Service, whose largest shareholder is CEO Choi Byung-chae, has moved to buy back 3 billion won worth of its own shares, but all 11,377,670 shares Choi holds in the company are pledged as collateral for loans.

According to the Financial Supervisory Service’s Electronic Disclosure System on the 11th, Incar Financial Service’s board of directors decided on the 9th to enter into a 3 billion won treasury share acquisition trust agreement with Korea Investment & Securities. The contract runs from the 10th through February 26 of next year.

Based on the closing price of 9,870 won on the 6th, the last trading day before the board meeting, the amount would be sufficient to purchase 303,951 shares. The company said the purposes of the buyback were to enhance shareholder value and compensate executives and employees.

On the same day, the company also decided to cancel 580,495 of its 722,293 treasury shares on the 19th, including shares purchased through a trust last June. Following the cancellation, the number of issued shares will decrease to 48,683,162.

Of Choi’s 23.42% stake, 1,955,991 shares have been pledged as collateral for 8 billion won in loans taken out by Choi himself, while 9,421,679 shares secure 29.8 billion won in loans taken out by Colosseum Media, an advertising agency classified as a specially related party. The secured creditor for both loans is Korea Investment & Securities, which is also managing the newly announced treasury share acquisition trust.

The 37.8 billion won in collateral-backed loans is subject to a 170% collateral maintenance ratio requirement, under which additional collateral must be provided if the share price falls. The loans are renewed every three months, and their current maturity date is January 29 of next year.

■ 120% Commission Clawback Clause to Be Reduced to ‘No More Than 100%’ Following Parliamentary Audit

Appearing as a witness before the National Assembly’s Political Affairs Committee on the 8th of last month, Choi was asked by Rep. Kim Hyung-yeon of the Rebuilding Korea Party about a clause allowing the clawback of up to 120% of insurance agents’ commissions. Choi replied, ‘It is a clause designed as a penalty because a policy canceled in the second or third month is not considered a normal contract.’

In a subsequent improvement plan submitted to Kim’s office, the company pledged to limit clawback amounts to no more than the commissions already paid, including for existing contracts, for cases arising from November 1 onward. It also agreed to submit the results of its implementation to the lawmaker’s office by December 31.

Earlier, in June, the Financial Services Commission issued an institutional warning to Incar Financial Service and imposed an administrative fine of 5.3111 billion won over practices including improper insurance policy replacements, in which customers are induced to cancel existing policies and switch to new ones, the solicitation of insurance contracts using other agents’ names, and commission payments to third parties.

At the Financial Supervisory Service’s parliamentary audit on the 19th of last month, Kim called for inspections to determine whether the improvement plan was being implemented in practice. Lee Chan-jin, governor of the Financial Supervisory Service, replied that the agency was considering a comprehensive inspection of all relevant cases.